The largest single type of security breach is the stolen or lost laptop, according to the Open Security Foundation, yet these computers are among the least protected of all IT assets. The costs of a data breach can be huge, including the loss of trade secrets, marketing plans, and other competitive information that could have long-term business damage, plus the immediate costs of having to notify people if their personal information was possibly at risk from the breach. Particularly in a recession, enterprise management can't afford to take these risks lightly.

There is a way for IT to protect those laptops and the confidential information they contain: encryption. Without the combination of password security and encryption, any halfway-competent hacker has no problem siphoning hard drive contents and putting it to nefarious use.

Perhaps the most important advantage of full disk encryption, though -- beyond the peace of mind it gives your business's lawyers -- is the "safe harbor" immunity that accrues under many data privacy regulations. For example, credit card disclosure rules don't apply to encrypted data, and even California's strict data-disclosure statute makes an exception for encrypted records -- provided you can prove they're encrypted. That's trivial with full disk encryption but not so easy with partial encryption techniques, which depend on user education for safe operation.

A key challenge for IT in deploying encryption on its laptops is the sheer number of encryption options available. Some Windows Vista editions, as well as the forthcoming Windows 7, support Microsoft's built-in BitLocker encryption, and numerous third-party encryption products cover the range of mobile operating systems from XP through Windows 7, Linux, and Mac OS X. Encryption granularity is widely variable as well, ranging from protecting individual files to encrypting virtual disks to deploying fully armored, hardware-based full disk encryption. Prices range from free to moderately expensive.

If you've put off laptop data security due to perceived technical shortcomings or high costs, you need to take another look at the field -- before you lose another laptop.

The maximum encryption protection possible: TPMIdeally, you'll deploy the full-metal-jacket approach to laptop data protection: full disk encryption using the Trusted Platform Module (TPM) technology. If you can afford the cost, waste no time with inferior methods. All you need is a laptop containing a TPM security coprocessor and, optionally, an encryption-enabled hard drive from one of the major hard drive manufacturers.

The TPM is a chip soldered on to the laptop's motherboard, providing hardware-based device authentication, tamper detection, and encryption key storage. The TPM generates encryption keys, keeping half of the key information to itself, making it impossible to recover data from an encrypted hard drive apart from the computer in which it was originally installed. Even if an attacker gets the user's part of the encryption key or disk password, the TPM-protected drive's contents can't be read when connected to another computer. Further, the TPM generates a unique digital signature from the motherboard in which it's embedded, foiling attempts to move the TPM chip itself to another machine.

TPM-enabled full disk encryption, especially hardware-based implementations of it, provides one other key benefit to enterprises: data erasure upon laptop decommissioning or repurposing. A common bugaboo in the enterprise is the accidental disclosure of data when seemingly worthless outdated laptops are discarded or sold, or transferred to another employee. Erasing sensitive information in such situations is not trivial, and even removing and physically mangling a laptop's hard drive is no guarantee against disclosure. However, because TPM has absolute control over the encryption keys -- remember, half of the key information is stored with the TPM itself -- you can simply tell TPM to forget its keys, and the hard drive is instantly reformatted and effectively rendered nonrecoverable. Disk sectors aren't zeroed, but no computationally feasible method exists today to decrypt the residue.

A great many enterprise-class laptops manufactured in the last two to three years shipped with embedded TPM chips; Apple's Macs are a key exception, as none since 2006 include a TPM chip. But the TPM chips must be explicitly enabled to use them as the authentication mechanism for encryption.

If your laptops have a TPM chip, don't try enabling it without carefully following the vendor's instructions -- otherwise, you could accidentally wipe out the laptop's hard drive. Before enabling the TPM chip in a laptop, you must first take ownership of it, a process that establishes user and management-level passwords and generates the initial set of encryption keys. The management password lets IT administration monitor the inventory of TPM devices, recover lost user passwords, and keep track of usage.

A TPM works with the laptop's resident operating system to encrypt either the entire hard drive or most of it, depending on the OS encryption implementation. (Microsoft's BitLocker, for example, requires a small, unencrypted initial-boot partition). Alternatively, a TPM can interoperate with encryption-enabled hard drives to perform encryption entirely outside of, and transparent to, the operating system.

The TPM technology isn't perfect, but it provides very solid protection in the most common incident, where a laptop is lost or stolen and the user has not left it logged in. If the laptop is powered off, TPM protection is absolute. Most implementations use 256-bit AES encryption, which is considered uncrackable for the foreseeable future. Powering up the device requires entering pre-boot credentials in the form of a password, a PIN, a smartcard, biometric data, a one-time-password token, or any combination of these. If the lost laptop is powered on (but not logged in), or just powered off, an attacker would have to use extraordinary procedures to recover the encryption keys from live memory.

However, if a lost device is powered up and logged in, a TPM provides zero protection. An interloper can simply dump the data off the hard drive in the clear using ordinary file copies. Thus, it's essential that TPM-protected systems have noncircumventable log-in timeouts using administrator-protected settings.

The cost for TPM protection starts at zero for Microsoft's BitLocker, which is built into Vista Enterprise and Ultimate, Windows Server 2008, and the forthcoming Windows 7. Major laptop manufacturers also sell software bundles that enable TPM in any Windows version, including XP, such as Wave's Embassy Trust Suite and McAfee's SafeBoot. The advantage of bundled software is sole-source support and pre-tested configurations.

You can also roll your own software protection using stand-alone packages such as PGP Whole Disk Encryption.

All these products support a wide range of enterprise-class management tools that let you enforce uniform policies and centrally store encryption keys, including special data-recovery keys that solve the problem of lost passwords and prevent employees from locking employers out of their hard drives.

If you can't do TPM, here's your plan B for encryptionAlthough the deployment of TPM-based full description is ideal, you may count the cost of full disk encryption and come up short-funded, especially if you just refreshed your enterprise laptops with non-TPM models. Forklifting your entire laptop population is an undeniably expensive proposition, as is replacing the non-TPM laptops if your company has a mix of TPM and non-TPM laptops. If you can't go all TPM, there's a plan B that can give you much of the encryption benefits you need.

You might think that plan B involves partial disk encryption, typically deployed by designating specific folders on a laptop as encrypted; as files are moved into that folder, they are automatically encrypted. Apple and Microsoft have long offered this form of encryption, via FileVault on the Mac and the Encrypted File System tools in Windows XP and Vista. But this approach has a major flaw: It depends on users to properly store sensitive data only in encrypted form.

A variation of folder-level encryption is virtual disk encryption (VDE), in which a single disk file contains a virtual disk image that the user can mount when needed; this virtual disk collects all sensitive files in one location. Microsoft's BitLocker offers this feature in all Vista editions, as well as in Windows Server 2008 and Windows XP. Third-party products such as PGPDisk and even free open source software programs such as TrueCrypt have VDE capabilities. Many of these third-party utilities are easier to use than BitLocker, so they can save you some implementation expense.

Another form of partial disk encryption is to apply encryption to specific files, typically those residing on corporate servers that users want to open locally. In this approach, users must enter a password every time they open a protected file. IT not only is on the hook to ensure that all sensitive files get encrypted but also has no way to stop users from simply saving the opened file as an unencrypted copy. Still, this protection is better than nothing and is widely available via free disk utilities. But key management can be a problem, and these file-level encryption tools generally don't support multifactor authentication.

But the best plan B to TPM-enabled full disk encryption isn't any of these partial disk methods. The best plan is software-only full disk encryption, in which either the operating system or a third-party program performs the same encryption as with TPM but uses another method to store the encryption keys, such as a thumb drive or a smart card.

The good news is that virtually all-TPM full disk encryption suppliers' offerings, including BitLocker, can operate in this software-only mode, which relies on a removable hardware token so that you can use this approach for your non-TPM devices while having a consistent encryption method to manage across all your laptops.

It's true that software-based full disk encryption is less secure than if you have a TPM-equipped laptop: The entire drive can still be encrypted, but a determined hacker will have more opportunities to gain access through compromised keys. For example, if the key-storage token is left with the notebook computer (how likely is that?), the hacker may be able to simply plug the token in and gain access to the drive contents. Even multifactor authentication in this scenario is subject to attack by inspection, since the key token is not tightly bound to the system motherboard.

Still, when TPM-enabled encryption is not an option, pure software full disk encryption can still give you considerable peace of mind, as well as provide the "safe harbor" benefits afforded encrypted systems in data-privacy regulations. Software full disk encryption solutions have also been around long enough that they're available for most mobile computing platforms, including Linux and Mac OS X.

TPM technology changes to comeAlthough TPM full disk encryption with hardware-based encryption in the hard drive is the best you can do for data protection today, security researchers are constantly testing TPM's mettle and devising improvements to it.

One potential vulnerability of today's separate TPM chip implementation is that keys must be transported across conductors in the motherboard to the CPU for software-based full disk encryption, or to the hard drive for hardware-based full disk encryption. That could provide an entry point for a hacker. That's why a major vendor trend is to move all TPM-oriented data manipulation on to the CPU chip set in the form of customized silicon. Intel has advertised its vPro solution, which is part of the upcoming Danbury processor and Eaglelake chip set. This feature will perform all encryption and decryption for SATA and eSATA drives without involving the CPU, OS device drivers, or even the hard drive itself.

Such an approach could make TPM even more secure. But there's no reason to wait until such chips are standard in laptops. With today's TPM-equipped laptops, and with the software-based fallback option for non-TPM laptops, you have a platform for a consistent, manageable, secure deployment strategy. Consider yourself lucky if you've successfully dodged the stolen laptop bullet thus far. But don't tempt fate -- or hackers. Implement some form of laptop encryption today.

Mel Beckman is a software engineer and network technology consultant. He’s written hundreds of articles about networks and software development for InfoWorld, Macworld, PC World, and many other publications.